U.S. Fidelity and Guar. Co. v. Hutchinson

• Decision Date: 21 April 1998
• Docket Number: No. 15790,15790
• Citation: 244 Conn. 513,710 A.2d 1343
• Parties: UNITED STATES FIDELITY AND GUARANTY COMPANY et al. v. John C. HUTCHINSON, Administrator (ESTATE OF Robert M. HUTCHINSON), et al.
• Court: Connecticut Supreme Court

Page 1343

710 A.2d 1343

244 Conn. 513

UNITED STATES FIDELITY AND GUARANTY COMPANY et al. v. John C. HUTCHINSON, Administrator (ESTATE OF Robert M HUTCHINSON), et al.

No. 15790.

Supreme Court of Connecticut.

Argued Jan. 15, 1998.

Decided April 21, 1998.

John W. Lemega, with whom was Daniel P. Scapellati, Hartford, for appellants (plaintiffs).

Michael C. Jainchill, with whom were Kathryn Calibey, Douglas W. Hammond and, on the brief, James D. Bartolini, Hartford, for appellees (defendants).

Before BORDEN, BERDON, NORCOTT, KATZ and PALMER, JJ.

BORDEN, Associate Justice.

The dispositive issue in this appeal involving an uninsured motorist arbitration award is whether the parties' submission to arbitration was unrestricted, where the insurance policy language (1) required the arbitrators to decide whether the insured was "legally entitled to recover damages," and (2) provided that "local rules of law as to arbitration procedure and evidence will apply." ¹ The plaintiffs, United States Fidelity and Guaranty Company and Fidelity and Guaranty Insurance Company, filed an application in the trial court to vacate an arbitration award in favor of the defendants, John C. Hutchinson and Katherine Y. Hutchinson, the coadministrators of the estate of their son, Robert M. Hutchinson (decedent), in the amount of $1,300,000. The trial court determined that the submission to arbitration was unrestricted, denied the plaintiffs' application to vacate the arbitration award pursuant to General Statutes § 52-418, ² and granted the defendants' application to confirm the award pursuant to General Statutes § 52-417. ³ The plaintiffs appealed from the judgment of the trial court to the Appellate Court. Upon the plaintiffs' motion, we transferred the appeal to this court pursuant to General Statutes § 51-199(c) and Practice Book § 4024, now Practice Book (1998 Rev.) § 65-2. We conclude that the submission was unrestricted, and affirm the judgment of the trial court.

The undisputed material facts are as follows. The defendants sought to recover uninsured motorist benefits for the death of their decedent, who was a passenger in a motor vehicle that was involved in an accident and was operated by Brian Thompson. The defendants demanded arbitration of their claim. The plaintiffs and defendants agreed, pursuant to the arbitration clauses contained in three motor vehicle insurance policies issued by the plaintiffs to the decedent's family, ⁴ to submit the issues of liability and causation, contributory negligence and coverage to arbitration before a panel of three arbitrators. ⁵

The arbitrators found that the evidence "clearly established that the motor vehicle operated by ... Thompson ... was an uninsured vehicle ... and that there was no other insurance covering ... Thompson for the operation of a motor vehicle." The panel also found that: (1) the accident was caused by Thompson's loss of control due to both speed and intoxication; (2) contributory negligence on the part of the decedent was not proven because there was no evidence to establish that he was on notice that Thompson was intoxicated when the decedent became a passenger in the vehicle; and (3) uninsured motorist coverage under the policies was limited to $1,600,000. The panel awarded $1,300,000 to the defendants as "a fair and reasonable amount of damages...."

The plaintiffs then applied to the trial court to vacate the arbitration award alleging that the arbitrators had exceeded their powers by: (1) finding the coverage issues in favor of the defendants; (2) finding that the defendants were "legally entitled to recover damages" under the terms of the insurance policies; and (3) failing to comply with the provision of the policies that " '[l]ocal rules of law as to [arbitration] procedure and evidence will apply.' " The defendants filed an application to confirm the arbitration award, and asked the court to award interest from the date of the arbitration decision.

In the trial court, both parties agreed that the threshold issue was "whether the submission to the arbitrators was restricted or unrestricted," and they further agreed that if the submission was determined to be unrestricted, then the arbitration award would stand. The plaintiffs claimed that two clauses in the insurance policies rendered the submission restricted, in which case the trial court was required to conduct a de novo review. Specifically, the plaintiffs argued that the phrase "legally entitled to recover damages" restricted the arbitrators to making their decision according to the prevailing laws of negligence, and that the clause "local rules of law as to arbitration procedure and evidence will apply" ⁶ restricted the arbitrators to following the rules of evidence that apply in the Superior Court. The defendants maintained that, under controlling case law, the submission is unrestricted.

The trial court disagreed with the plaintiffs' contentions and concluded that the submission was unrestricted. Specifically, that court reasoned that our decision in Carroll v. Aetna Casualty & Surety Co., 189 Conn. 16, 20-21, 453 A.2d 1158 (1983), controlled the submission at issue, because in that case we concluded that the phrase "legally entitled to recover damages" did not restrict the submission. The trial court also concluded that the phrase "local rules of law as to arbitration procedure and evidence" was ambiguous, and construed the phrase against the plaintiffs, who were the drafters of the insurance policies. Accordingly, the trial court denied the plaintiffs' application to vacate the arbitration award, granted the defendants' application to confirm the arbitration award, and awarded interest at the statutory rate. This appeal followed.

On appeal, the parties agree, as they did in the trial court, that, if we determine that the submission is unrestricted, then the award of the arbitrators must be sustained. The plaintiffs argue that the trial court improperly concluded that the submission to the arbitration panel was unrestricted. They contend that the two provisions at issue, namely, the phrases "legally entitled to recover" and "local rules of law as to arbitration procedure and evidence apply," created a restricted submission based on our case law. The defendants argue, to the contrary, that Carroll is the controlling precedent, thus causing this submission to be unrestricted. We agree with the defendants.

"Arbitration is a creature of contract and the parties themselves, by the terms of their submission, define the powers of the arbitrators. Waterbury v. Waterbury Police Union, 176 Conn. 401, 403, 407 A.2d 1013 (1979). Where the language of the arbitration clause indicates an intention on the part of the parties to include all controversies which may arise under their agreement, and where the record reveals no specific questions which the parties submitted to the arbitrator, the submission will be construed as unrestricted. Malecki v. Burnham, 181 Conn. 211, 213, 435 A.2d 13 (1980)." (Internal quotation marks omitted.) Carroll v. Aetna Casualty & Surety Co., supra, 189 Conn. at 20, 453 A.2d 1158. A submission is deemed restricted "only if the agreement contains express language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review." Garrity v. McCaskey, 223 Conn. 1, 5, 612 A.2d 742 (1992).

" 'Because we favor arbitration as a means of settling private disputes, we undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution.' " Saturn Construction Co. v. Premier Roofing Co., 238 Conn. 293, 304, 680 A.2d 1274 (1996). "Under an unrestricted submission, the arbitrators' decision is considered final and binding; thus the courts will not review the evidence considered by the arbitrators nor will they review the award for errors of law or fact." American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 186, 530 A.2d 171 (1987); Carroll v. Aetna Casualty & Surety Co., supra, 189 Conn. at 19, 453 A.2d 1158. The resulting award can be reviewed, however, to determine if the award conforms to the submission. Garrity v. McCaskey, supra, 223 Conn. at 4, 612 A.2d 742. "Such a limited scope of judicial review is warranted given the fact that the parties voluntarily bargained for the decision of the arbitrator and, as such, the parties are presumed to have assumed the risks of and waived objections to that decision.... It is clear that a party cannot object to an award which accomplishes precisely what the arbitrators were authorized to do merely because that party dislikes the results." (Citations omitted.) American Universal Ins. Co. v. DelGreco, supra, at 186-87, 530 A.2d 171. The significance, therefore, of a determination that an arbitration submission was unrestricted or restricted is not to determine what the arbitrators are obligated to do, but to determine the scope of judicial review of what they have done. Put another way, the submission tells the arbitrators what they are obligated to decide. The determination by a court of whether the submission was restricted or unrestricted tells the court what its scope of review is regarding the arbitrators' decision.

In Carroll v. Aetna Casualty & Surety Co., supra, 189 Conn. at 19 n. 5, 453 A.2d 1158, the insurance policy provided in relevant part: " 'If any person making claim hereunder and the Company do not agree that such person is legally entitled to recover damages ... or do not agree as to the amount of payment which may be owing under this Coverage, then, upon written demand of either the matter ... shall be settled by arbitration....' " (Emphasis added.) The insurer in Carroll made the identical argument that the plaintiffs make in the present case, namely, that because the arbitrators were required to decide according to law, the submission was restricted and subject to an...